- Current report filing (8-K)
August 14 2009 - 6:08AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
August 13,
2009
Orleans Homebuilders, Inc.
(Exact Name of
Registrant as Specified in Charter)
Delaware
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1-6830
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59-0874323
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(State or Other
Jurisdiction
of Incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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3333
Street Road, Suite 101, Bensalem, PA
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19020
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(Address of
Principal Executive Offices)
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(Zip Code)
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Registrants telephone number, including area code:
(215) 245-7500
Not Applicable
(Former Name or
Former Address, if Changed Since Last Report)
Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (
see
General Instruction A.2. below):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On August 13, 2009,
Orleans Homebuilders, Inc. (the Company), its wholly owned subsidiary,
Greenwood Financial, Inc., and certain affiliates of Greenwood Financial, Inc.,
Wachovia Bank, National Association, as administrative agent (Wachovia), and
various other lenders entered into the Second Amendment (the Amendment) to
the Second Amended and Restated Revolving Credit Loan Agreement dated as of September 30,
2008 (the Loan Agreement). The summary
of the material terms of the Amendment set forth below is qualified in its
entirety by reference to the text of the Amendment, a copy of which is attached
hereto as Exhibit 10.1.
·
The existing category limitations
applicable to the determination of the net borrowing base availability were
adjusted as follows:
·
The maximum borrowing base availability attributable to
work-in-progress inventory not subject to a qualifying agreement of sale (that
is, spec inventory and model home inventory) will be maintained at the existing
58% of total work-in-process inventory including backlog units (rather than
otherwise being reduced to 45% for the borrowing base certificate as of July 31,
2009); and
·
The maximum borrowing base availability attributable to land under
development will be maintained at the existing 65% of total borrowing base
availability (rather than otherwise being reduced to 55% for the borrowing base
certificate as of July 31, 2009), but generally subject to a maximum of
$235 million prior to September 30, 2009 and a maximum of $190 million for
any borrowing base certificate delivered on or after September 30, 2009.
These changes apply to
all borrowing base certificates delivered before September 30, 2009.
·
The definition of borrowing base
availability was modified to exclude up to $5.1 million of existing financial
letters of credit through and including September 29, 2009, which improves
the Companys liquidity by the same amount.
Without this change, all financial letters of credit would be deducted
when determining the borrowing base availability.
·
The requirements relating to ongoing bank
reappraisals of borrowing base assets were modified to provide that
reappraisals of borrowing base assets received by the Company after July 8,
2009 are not required to be reflected in any borrowing base certificate
delivered after the effective date of the Amendment and before the borrowing
base certificate due on October 15, 2009.
·
The Companys minimum liquidity covenant
was amended to temporarily reduce the amount of liquidity required to be
maintained by the Company to not less than $0 through and including September 29,
2009. Thereafter, the minimum liquidity
requirement remains at not less than $10 million.
·
The additional loan fee under the
existing loan agreement previously due to lenders on September 15, 2009
was postponed until September 30, 2009.
The Company anticipates that, if payable, this fee may be as high as
approximately $12.6 million.
·
A change of control definition was
added to the Loan Agreement to be consistent with the change of control
provision in the indenture entered into in connection with the $75 million
issue of trust preferred securities exchange offer consummated on August 3,
2009. The events of default under the Loan
Agreement were modified to include such a change of control, as is customary in
credit agreements. Under the Amendment
and the change of control provision in the exchange offer for the $75 million
issue of trust preferred securities, change of control is defined as the
occurrence of one or more of the following events: any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company to any person or group of
related persons for purposes of Section 13(d) of the Exchange Act (a Group),
together with any affiliates thereof, on an arms length basis with an entity
that is not an affiliate of the Company; or any person or Group (other than
Jeffrey P. Orleans and his affiliates and family or any affiliate of the
Company (collectively, a Permitted Party) shall acquire either by purchase
from a Permitted Party or from the Company through purchase or merger or
otherwise, directly or indirectly, beneficially or of record, shares
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representing more
than 80% of the issued and outstanding equity interests of the Company and more
than 50% of the aggregate ordinary voting power represented by the issued and
outstanding equity interests of the Company.
·
The Company paid a bank amendment fee of
$250,000 in aggregate to the requisite lenders that approved the amendment, as
well as certain expenses of the lenders.
The Company believes that
the temporary enhancements to liquidity achieved through the Amendment should
meet the Companys liquidity needs only up to approximately September 30,
2009. The Company anticipates that
without either an extension of the maturity date in the Loan Agreement and
other related modifications, or an additional amendment to the Loan Agreement,
on or before September 30, 2009: (i) the net borrowing base
availability at that time will likely be significantly less than the borrowings
under the Loan Agreement at that time; (ii) the Company will be unable to
pay the existing additional loan fee presently due on September 30, 2009; (iii) the
Company will violate the minimum liquidity covenant in the Loan Agreement at
some time between September 30, 2009 and October 22, 2009; and (iv) the
Company will not have sufficient liquidity to continue its normal operations on
approximately September 30, 2009, or shortly thereafter. In
addition, the Company may need additional amendments to its credit facility for
a variety of reasons prior to September 30, 2009, such as to provide
additional liquidity. For additional
discussion of the Companys liquidity, including a discussion of the scheduled December 20,
2009 maturity date of the Loan Agreement, please refer to the Liquidity and
Capital Resources section of the Companys Quarterly Report on Form 10-Q
for the quarter ended March 31, 2009 filed with the Securities and
Exchange Commission on May 15, 2009.
On August 13, 2009
the Company issued a press release announcing the Amendment, a copy of which is
furnished herewith as Exhibit 99.1
Cautionary Statement for
Purposes of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995
Certain information
included herein and in other Company statements, reports and SEC filings is
forward-looking within the meaning of the Private Securities Litigation Reform
Act of 1995, including, but not limited to, statements concerning anticipated
or expected conditions in or recovery of the housing market, and economic
conditions; the Companys long-term opportunities; continuing overall economic
conditions and conditions in the housing and mortgage markets and industry
outlook; anticipated or expected operating results, revenues, sales, net new
orders, pace of sales, spec unit levels, and traffic; future or expected
liquidity, financial resources, debt or equity financings, amendments to or
extensions of our existing revolving credit facility, strategic transactions
and alternatives or other alternative recapitalization or exchange offer
transactions; the anticipated impact of bank reappraisals; future impairment
charges, future tax valuation allowance and its value; anticipated or possible
federal and state stimulus plans or other possible future government support
for the housing and financial services industries; anticipated legislation and
its impact; expected tax refunds; anticipated use of proceeds from
transactions; anticipated cash flow from operations; reductions in land
expenditures; the Companys ability to meet its internal financial objectives
or projections, and debt covenants; potential future land sales; the Companys
future liquidity, capital structure and finances; and the Companys response to
market conditions. Such forward-looking
information involves important risks and uncertainties that could significantly
affect actual results and cause them to differ materially from expectations
expressed herein and in other Company statements, reports and SEC filings. For example, there can be no assurance that
the Company will be able to obtain any amendment to or extension of its
existing revolving credit facility or other alternative financing or adjust
successfully to current market conditions.
These risks and uncertainties include local, regional and national
economic conditions, the effects of governmental regulation, the competitive
environment in which the Company operates, fluctuations in interest rates,
changes in home prices, the availability and cost of land for future growth,
the availability of capital, our ability to modify or extend our existing
credit facility or otherwise engage in a financing or strategic transaction;
the availability and cost of labor and materials, our dependence on certain key
employees and weather conditions.
Additional information concerning factors the Company believes could
cause its actual results to differ materially from expected results is
contained in Item 1A of the Companys Annual Report on Form 10-K/A for the
fiscal year ended June 30, 2008 filed with the SEC and subsequently filed
Quarterly Reports of Form 10-Q.
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Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits
The following exhibits are filed or furnished with
this Current Report on Form 8-K:
Exhibit No.
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Description
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10.1
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Second Amendment to
Second Amended and Restated Revolving Credit Loan Agreement (filed herewith).
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99.1
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Press release of
Orleans Homebuilders, Inc. dated August 13, 2009 (furnished
herewith).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated:
August 14, 2009
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Orleans
Homebuilders, Inc.
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By:
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Garry
P. Herdler
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Name:
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Garry
P. Herdler
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Title:
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Executive
Vice President,
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Chief
Financial Officer and
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Principal
Financial Officer
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EXHIBIT INDEX
The following exhibits
are filed or furnished with this Current Report on Form 8-K:
Exhibit No.
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Description
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10.1
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Second Amendment to
Second Amended and Restated Revolving Credit Loan Agreement (filed herewith).
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99.1
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Press release of
Orleans Homebuilders, Inc. dated August 13, 2009 (furnished
herewith).
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